<?php
	//for each category, show all posts
	$cat_args=array(
	  'orderby' => 'name',
	  'order' => 'ASC'
	   );
	$categories=get_categories($cat_args);
	foreach($categories as $category) {
	$args=array(
	  'showposts' => -1,
	  'category__in' => array($category->term_id),
	  'caller_get_posts'=>1
	);
	$posts=get_posts($args);
	  if ($posts) {
	    echo '<p>Category: <a href="' . get_category_link( $category->term_id ) . '" title="' . sprintf( __( "View all posts in %s" ), $category->name ) . '" ' . '>' . $category->name.'</a> </p> ';
	    foreach($posts as $post) {
	      setup_postdata($post); ?>
	      <p><a href="<?php the_permalink() ?>" rel="bookmark" title="Permanent Link to <?php the_title_attribute(); ?>"><?php the_title(); ?></a></p>
	      <?php
	    } // foreach($posts
	  } // if ($posts
	} // foreach($categories
?>